Cheers Inc

question 9

Multiple Choice

Cheers Inc.operates as a partnership.Now the partners have decided to convert the business into a regular corporation.Which of the following statements is CORRECT?

• A) Assuming Cheers is profitable, less of its income will be subject to federal income taxes.
• B) Cheers will now be subject to fewer regulations.
• C) Cheers' shareholders (the ex-partners) will now be exposed to less liability.
• D) Cheers' investors will be exposed to less liability, but they will find it more difficult to transfer their ownership.
• E) Cheers will find it more difficult to raise additional capital.

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Definitions:

Formal Authority

The power granted to an individual or organization to make decisions and enforce rules based on an established position.

Coercive Power

A form of power that is based on the ability to deliver punishments or sanction undesirable behaviors.

Coercive Power

The ability to compel or force someone to do something through threats or force.

Legitimate Power

Power that is officially sanctioned by an organization or institution, and is accepted by members as rightly exercised.